Irishman Ray O’Rourke, chief executive and founder of Laing O’Rourke, the UK’s largest privately owned construction group, plans to step down after 45 years, making way for its new head to lead the group to a stock market listing.
Mr O’Rourke, who said in the summer that the group would seek an initial public offering by 2024, will be succeeded in September 2022 by Seamus French, the chief executive of Anglo American’s bulk commodities and other materials division. Mr O’Rourke will remain deputy chair of the group alongside his brother Des, with whom he founded the business in 1978 as an initial £2,500 project.
Laing O’Rourke has been involved in some of the UK’s biggest infrastructure projects including Hinkley Point nuclear power station, Heathrow Terminal 5, the Crossrail and HS2 railway and the Thames Tideway — a sewage tunnel under the river. It also has a base in Australia which it considered withdrawing from in 2016, but reversed course and refinanced the business.
If the group picked London for its planned flotation it would join large listed competitors such as Balfour Beatty, Kier and Morgan Sindall.
Stephen Rawlinson, analyst at Applied Value, estimated that the business could be valued at around £700 million (€831m). “The company is moving to the next stage as there are many opportunities for growth in the UK market,” he said.
The UK’s construction industry is benefiting from prime minister Boris Johnson’s plans to spend £600billion on infrastructure over five years, but it is also grappling with severe labour shortages in the wake of Britain’s decision to leave the EU, as well as rising material costs.
UK contractors have faced a difficult time since the collapse of the outsourcer Carillion in 2018. Interserve has been taken into the hands of creditors and is in the process of being wound down, while Kier has been rebuilding its balance sheet after a series of profit warnings.
Laing O’Rourke made a £45.5 million pre-tax profit in its 2020 financial year on revenues of £2.4 billion after suffering a loss of nearly £220 million four years earlier.
To reduce labour costs and shorten construction times, Laing O’Rourke is a longtime advocate of off-site manufacturing, which involves building large sections for construction projects in factories and bringing them to sites. It says that it manufactures 70 per cent of a project off site, improving productivity.
“It is the most advanced operation in off-site manufacturing in the UK building and infrastructure sector, which differentiates it from its peer group,” said Mr Rawlinson.
The company’s chair, Sir John Parker, said French was a “world-class executive with rich engineering experience, a successful leadership and project record, and deep knowledge of our operating markets.” – Copyright The Financial Times Limited 2021